The Top Ten Economic Indicators In The UK

Below are the ten key economic indicators for the United Kingdom, the world’s sixth-largest economy. Most of these indicators are published by the Office for National Statistics (ONS). ONS is an independent producer of official statistics, and is regarded as the national statistical institute.

1.) GDP growth

Every quarter, the ONS issues three releases – a preliminary first estimate, a revised second estimate, and a third and final estimate – of the quarterly change in gross domestic product (GDP). The reports show GDP change, which is the main indicator of economic growth, as well as the contribution to growth of the four main sectors of the economy: agriculture, construction, production, and services.

2.) Labor Market Statistics

Key data on the employment market in the UK, such as the net change in employment, unemployment rate, economic inactivity, claimant count, average weekly earnings, labor productivity, and vacancies, are contained in the Labor Market Statistics report released monthly by the ONS. These estimates are derived from the Labor Force Survey (LFS), which is representative of the UK population over a three-month period, rather than a single month. The LFS is also used to generate single-month indicators for the labor market, but these are considered to be supplementary data, whose use is restricted to an improved understanding of the movements in the headline three-month average rates for employment, unemployment, etc.

3.) Inflation indicators

The ONS releases monthly reports on the Consumer Price Inflation Index (CPI) and Producer Price Index (PPI), which measure inflation at the consumer and producer levels, respectively. The CPI is constructed by comparing the changes over time in the cost of a fixed basket of goods and services purchased by consumers. The monthly report shows the change in CPI monthly and over the past 12 months. The CPI is the inflation measure used in the British government's target for inflation, and is also used for indexing pensions, as well as wages and benefits.

4.) Balance of Payments

This quarterly report from the ONS summarizes the economic dealings of the UK with the rest of the world. It is broken down into three main areas: current account, capital account, and financial account. The report includes detailed information on UK trade in goods and services; also income, current and capital transfers, and transactions in UK external assets and liabilities. Additional information, such as the current account as a percentage of GDP, and the current account with EU/non-EU countries, is also shown. Balance of payments data have a significant bearing on the value of the national currency. The UK has run a combined current and capital account deficit every year since 1983, meaning that it is a net borrower from the rest of the world.

5.) Household Expenditure

Household spending is shown in ONS's quarterly Consumer Trends report in both current prices and volume terms, on an inflation-adjusted basis. Household expenditure measures the contribution of households to economic growth, and accounts for some 60% of the expenditure measure of the UK's GDP. While 'current prices' shows the value of household spending in a given quarter, the 'volume terms' adjusts for price inflation, providing a more accurate picture of whether households are actually buying more goods and services.

6.) Retail Sales

The ONS releases a monthly report on retail sales activity across the UK, showing changes in sales activity in a given month, compared to the previous month and to a year ago. The figures contained in the report are based on a monthly survey of 5,000 retailers, including all large retailers employing at least 100 people. The monthly report also shows the four retail sectors’ contribution to sales growth, as well as their share of each pound spent in the retail industry. The four retail sectors are: predominantly food stores (supermarkets, specialist food stores, sales of alcoholic drinks, and tobacco); primarily non-food stores (department stores, textiles, clothing and footwear, household goods); non-store retailing (mail order, catalogues); and stores selling automotive fuel (petrol stations).

7.) Index of Production

The ONS provides monthly estimates of the Index of Production for the UK's production industries, which account for close to 15% of GDP. The Index of Production is one of the earliest indicators of growth, measuring output in manufacturing, mining and quarrying, energy supply, water supply, and waste management industries. Index values are referenced to 2011, which means that an index value of 115 would indicate output is 15% higher than the average for 2011. Index estimates are based on a monthly business survey of about 6,000 businesses across the UK.

8.) GfK Consumer Confidence

Consumer confidence in the UK is obtained from the findings of the GfK Consumer Climate Europe survey, which is conducted by the research firm GfK in all EU countries on behalf of the European Commission. While the survey has 12 questions overall, five are used to calculate five key indicators: economic expectations, price expectations, income expectations, willingness to buy, and propensity to save. Each indicator has a long-term average of zero points and a theoretical value range of +100 to -100 points. If an indicator has a positive value, it shows that consumers' assessment of this variable is above-average in a long-term comparison. Conversely, a negative value conveys a below-average assessment.

9.) Halifax House Price Index

This is the UK's longest-running monthly house price series, with data for the entire country from January 1983 to present. The index is named after the UK's largest mortgage lender, a subsidiary of Lloyd’s Banking Group plc. These data are used to calculate a standardized house price, with the annualized change computed as an average for the latest three months (to smooth out short-term fluctuations) compared with the year-earlier period. Changes in house prices are provided on a national and regional basis.

10.) Public Sector Expenditure and Debt

Data on public sector expenditure, receipts, investments, borrowing, and debt are reported in the monthly Public Sector Finances statistical bulletin from the ONS. These figures enable the evaluation of the UK government's fiscal position.

The Bottom-Line

The 10 economic indicators described above collectively provide a comprehensive picture of the state of the UK economy.

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